TL;DR — There’s a good chance we’ve already seen the bottom. Regardless, you should start investing now.

Before I dive into the unpopular opinion on why we’ve hit the bottom of the market in March, let’s first discuss the popular opinion that stocks will head much lower, as they did in 2008.

Bear Case — We’re In a Relief Rally, and The Market Will Head Lower, As It Did in 2008

TL;DR — The Big Trade

This past Monday, I sold the remainder of my tech positions that have benefited significantly from work-from-home (e.g. Wayfair, Peloton, Match Group, etc.) and have started buying travel stocks (e.g. Norwegian Cruise Line, Carnival, Royal Caribbean, United Airlines).

I’ll explain my rationale and assumptions below.

New COVID Case Growth Drives Performance of Travel and Technology Stocks

If you read any news website, you’ll see headlines about how COVID cases are worse in the United States than ever before. This has created pessimism throughout the country, with many states taking more preventative measures to stop the spread of the virus (which they rightfully should be doing).

During this “second spike” in COVID…

TL;DR — They own 5 of the 7 most popular dating apps in the US, including Tinder and Hinge, and they’re just getting started.

When I think about investing in technology companies, I generally look for businesses with moats that get bigger with scale, in industries that are rapidly growing. I believe Match Group (MTCH), the world’s most popular network of dating apps, fits that mold and will continue to leverage its large network of users and dating data to become a powerhouse in the technology field for the years to come.

What is Match Group?

Match Group owns 5 of the 7 most…

TL;DR — Square’s Cash App has strong growth potential. However, Square’s eroding unit economics should create caution for investors.

Square Enables Businesses to Accept Payments

Founded in 2009, Square was a pioneer in helping small and medium-sized businesses (SMBs) to accept payments. You may have seen Square’s trademark card-reader at your local coffee shop, restaurant, or yoga studio.

Their payment-enabled tablets and card readers that you see in the above picture are called point-of-sale (POS) terminals and are a massive part of the payments ecosystem. One thing to note here is that Square sells primarily to small and medium-sized businesses (your mom-and-pop coffee shop) vs. …

TL;DR — The Most Well-Diversified Company in the World, with a World-Class CEO, Leads the Charge in the Age of Data

Microsoft’s 2019 Revenue By Product/Service

Microsoft’s FY2019 Revenue (Fiscal Year Ends June 30th, 2019). I made this pie chart using the company’s latest 10-K

Microsoft Touches Everything in the World and Is Poised to Dominate in the Age of Data

Think for a second how often you interact with a Microsoft product on a daily basis.

  • If you visit a website, there’s a good chance that it’s running on Microsoft Azure (26% of revenue).
  • If you are working from an office, there’s a good chance that you are using Office365 (25% of revenue)
  • If you are using a PC, chances are that PC is running on Windows (16% of revenue)
  • If you’re gaming, there’s a chance that you’re using…

TL;DR — Virtual desktops (Citrix, VMWare) and Platform Vendors (Palo Alto Networks, Fortinet) look like attractive plays

Imagine you’re driving a car and all of a sudden, you’ve taken your foot off the gas pedal. The car continues to coast before coming to a stop. Using this hypothetical example, the car is the worldwide spending on enterprise software and it looks like the driver (the CFOs / IT departments that purchase this software) is taking their foot off the gas pedal in light of the impact of COVID-19.

Based on how enterprise software spending performed during the previous two downturns…

TL;DR — Here’s a way to 2x — 3x your money in 2–3 years.

Before I get into the “lottery tickets”, let’s walk through some simple arithmetic.

The Math

Entry Points are an important consideration when investing in today’s market. What does that mean? Say you have a stock that was trading at $50 per share and dropped 80% to $10. If you were to buy that stock at $10, and it returned to its previous price of $50, then you would gain 400%. The upswing percentage is much larger than the downswing percentage. It’s funny how math works.

The Lottery Ticket Industries

Why is this…

Lawrence Han

Technology Investor

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